Markets regulator has said that businessman Rodrick Muhoro made Sh260 million from a treasury bond scam it is probing.
Capital Markets Authority further noted that Muhoro conspired with approved dealers who had privileged information to trade in their own account ahead of customers for gains.
The dealers, David Maena of CBA Capital and Stephen Ngunje of African Investment Bank received majority of the gains to a tune of Sh111 million.
Muhoro, a Bank Of Africa account holder, used his account to carry out the alleged illegal transaction. A probe by CMA into Muhoros accounts from January 2016 to June 2017 shows that the trading was financed by BOA.
In March, BOA suspended a bond trading facility valued at Sh210 million to Muhoro saying that it is engaging in product re-engineering and strategy.
“As a result of the said investigation, the petitioners loan request from the Bank has been declined, the investigation are not just hurting Muhoro but are prejudicial to his business,” Muhoros lawyer Jotham Arwa said of the suspended bond facility.
The bank said it will no longer offer the facility to Muhoro, a move seen by the businessman as a directive from the regulator.
Last month, Muhoro filed a petition in court to stop the ongoing investigations on claims that he is being harassed by the regulator.
Through his lawyer, Muhoro has sued the regulator and Bank of Africa, saying that CMA is wrongly accusing him of making transactions that led the bank making irregular payments to fixed income dealers, allegations that CMA has denied.
He argues that while the regulator is keen on its investigations, it has refused to respond to his request for information on the exact nature and particulars of the transactions as well as payments being referred to.
"To date, Muhoro has still not been appraised on what these potentially irregular transactions and payments entail to enable him to respond to the same accordingly," Arwa said.
In a replying affidavit to the petition, CMA notes that the businessman confessed to have given loans to the dealers which facilitated the dual trading and had vowed to stop.
The affidavit has further revealed that CMA wants the investigations be expanded to 2010 due to unsatisfactory explanation from Muhoro.
However, Muhoro is against the move and wants the court to block BOA from releasing his personal record.
“ All this is happening without the petitioner knowing exactly what this purpoted allegations are about and what exactly he has done wrong to merit the nature of actions that have been meted against him,” Arwa said
Pending the expansion, CMA further wants the petition suspended as investigations are ongoing and no determination has been made so far.
“ The petition filed lacks merit is premature and amounts to an abuse of the court process since its an attempt to cause delay, and frustrate the inquiry being undertaken by the regulator in fulfillment of its mandate,” CMA Head of investigation and enforcement Abubakar Hassan said.